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“How Did a Tiny, $20 Million Startup Make Tesla’s Entire Product Line Obsolete?” — What’s the tiny electric motor stock teased by Alex Koyfman?

So... um... what is it? Let's ask the Thinkolator

By Travis Johnson, Stock Gumshoe, December 5, 2019


This article was originally published on October 18, 2018, we’re re-sharing it here with a minor update because Koyfman is now apparently taking advantage of the fact that Tesla’s in the news again by teasing this as a new spiel, his emails catch your attention with “Here’s why Elon’s Truck is Dumb” subject lines, but then the ad itself seems identical to what we’ve covered before… it starts out:

“Tesla Is Now the Most Successful Electric Vehicle Manufacturer in the World
But in Less Than Three Years’ Time, its Cars Will Be Out of Date…
And It’s All Because of This Device:”

The pitch still implies a great urgency to all of the things going on, without mentioning that most of the big and “gotta get on board quick” developments he cites in the ad are from over a year ago. What follows has not been revised since mid-October of last year, except for my new P.S. at the bottom

This teaser pitch has everything you’d dream about… a “david and goliath” story, a huge market that’s ripe for innovation, a “doing good by getting rich” aspect because it helps make renewable energy more effective… and, of course, the dreams of riches that come from a penny stock.

So, naturally, we want to figure out what the real story is. The ad comes from Alex Koyfman, who’s pitching his Penny Stock Millionaire ($999/year), and the letters introducing the ad talk up the “I’ve been pitched dumb stuff before, and I can tell this one is for real” aspect of the story… here’s a taste of the ad:

“I’m no newbie to the game of salesmanship, so I was hesitant to believe the scope of this thing at first.

“But after the 30-minute conversation was over, I knew I would never view the world the same way again.

“It was like I’d spoken to Thomas Edison himself and heard his plans months before the rest of the world had any idea what was happening.”

It’s OK to roll your eyes at that last sentence, we’ve got plenty of time. All set? OK, here’s some more of the story from Koyfman…

“This company’s product is already entering the market.

“It’s already signed licensing deals to put this technology into a wide array of commercial products.

“Its stock is already responding.”

OK, so that sounds pretty cool — already getting designed into commercial products? What else? How about some clues about the actual technology they’re selling?

“It took a stroke of genius and the work of a barely known, development-stage company to finally make a quantum leap in electric motor design.

“Within the next few years, this technology will replace everything that’s come before it…..

“Electric generators and motors work at peak efficiency in a narrow speed and torque range. And that limits their abilities to convert energy or produce electricity efficiently as speed varies.

“This results in great energy losses in all applications, most notably: Wind power generation, electric cars and mass transit vehicles, run-of-river generation, mining operations, etc….

“What this company did, that no company before it has ever been able to do, is build a gearing system into the spool itself.

“Only, it’s not mechanical like the kind you’d find on a bike or inside the gearbox of your car.”

Huh? OK, so some kind of variable control for that coiled copper wire that makes an electric motor work? I’m getting beyond my depth pretty fast here, but let’s grab a few other clues:

“The system is called ‘dynamic power management’ (DPM). And today, it’s giving the same kind of advantage to a whole new generation of electric motors and generators.

“It’s the same kind of advantage that a 10-speed bike would have over a primitive bike from the 1800s or a child’s tricycle.”

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That makes a little more sense, even for a non-engineer like me.

There’s some truly hyperbolic talk in the ad, too, even beyond the “this is like listening to Thomas Edison” bit:

“… it’s a single invention that within the next five to 10 years will make every existing electric motor and power generator obsolete.”

We’re told that this new electric motor technology will improve efficiency, reduce size, and increase safety…. and that it will touch almost everything, since the vast majority of energy consumption touches a conventional electric motor — either directly, in moving your electric car, or indirectly, in that electricity generation turns kinetic energy (spinning gas turbines, moving windmill blades, etc.) into electricity using basically the same kind of electric motor in reverse.

And finally, a few more clues from the ad:

“World-changing innovations tend to take hold quickly. And this company has already taken the first three steps.

“This past spring, the company inked a partnership deal with a major North American electric motor and generator producer.

“The partner is a heavy hitter that manufactures motors and generators for a wide variety of industrial and commercial applications.”

OK, so that means we don’t even need the other two steps — if you’re curious, they’re “small wind turbines” and train motors, both of which are being developed in partnership with this same “major North American electric motor and generator producer.”

But we’ve got plenty for the ol’ Thinkolator to chew on… what’s our answer?

This is little Exro Technologies (XRO.CX on the CSE in Canada, or EXROF OTC in the US), a company that is trying to sell their power management technology which uses “dynamic coil wiring switching” to make electric motors (and generators) more efficient. Koyfman even pulled some of the images in his ad from the company’s investor presentation slides, in case you require any confirmation.

That same presentation indicates that the company has invested $12 million in developing this technology, and as of January had built three prototypes and demonstrated, for the generators, “energy efficiency gains ranging from 2% to 7%” — which would, of course, be huge in the big picture, if all generators just immediately switched over to this technology… but it doesn’t sound like it’s necessarily overwhelming in any individual instance, particularly since this is a pretty early stage prototype we’re talking about, which I would guess might make it hard to convince companies to invest in the technology (they don’t plan to build motors or generators themselves, they’re hoping to design and sell power management systems to the companies who do make that stuff).

Exro has a video that explains the basics of their technology and the reason they think it’s going to be important — they focus on the fact that their dynamic system lets them adjust the operation of the motor in real time to make it more efficient. That’s important for generating electricity from things like wind power, where the speed of the turbine is not stable or predictable, or for things like powering electric cars and trains, where there are distinct needs, with different optimal efficiencies, depending on whether the vehicle is starting from a dead stop or maintaining a high speed — some of the material notes that electric cars often include multiple electric motors for different purposes (startup versus cruising), and this might enable them to use just one motor. This is how they describe it on the website:

“Our technology is designed to increase efficiencies while harnessing energy in variable settings

“Exro’s DPM (Dynamic Power Management) technology is a control system that integrates wiring of the rotating machine coils into the power electronics. This gives the power electronics control of the machine coil wiring configuration in real time. Each configuration has related but different operating characteristics, providing a range of options in place of a fixed machine configuration.

“The more variable the application, the greater the efficiency and economic gains.”

And that’s about all I can tell you about that — I don’t know much about engineering, and I have no idea whether this dynamic power management is really a brand new idea, or is revolutionary or unique or likely to change the world… or just another “guy with a new engine design” that will be forgotten, as hundreds have been in the past.

Koyfman almost certainly found out about this company by attending the LD Micro Conference in New York last month, the folks at Angel Publishing have long used the LD Micro microcap conferences as places to find their penny stock ideas that they then tease to us with promises of remarkable potential — and, since these are penny stocks that usually need constant financing and are always likely to have a very high failure rate, the CEOs know they have to sell themselves and they’re usually very happy to talk to newsletter editors (and even individual investors).

These kinds of “turning R&D into a product” companies all have ideas that they hope will change the world, and they often have a well-crafted “elevator pitch,” but a little skepticism would generally not be misplaced — the companies who sign up to present at LD Micro and similar conferences are not those you’d want to risk your retirement or your kids’ college savings on, these are rank speculations.

Which is why, just to give you a few more moments to think it over, I published this piece after the market close… writing about a company like this to a few thousand of my closest friends is likely to impact the share price, even if I don’t say anything particularly exciting about the stock. It has a market cap of only about C$15 million, and only went public about a year ago… though they haven’t reported their financials recently, and did a secondary for about $1.8 million and set up an “at will” financing agreement for another (up to) $5 million (both in Canadian dollars, I assume), so the market cap might be a bit higher now.

They do have a few pre-commercial collaborations announced, usually described without a lot of timeline detail, but the key one seems to be their partnership with Potencia Industrial, a Mexican motor and generator company, that’s described here. Potencia appears to have been around for a long time, but it’s private and we don’t know anything about their finances. The announcement specifies those three areas in which Exro and Potencia will collaborate to integrate the technology into Potencia’s motors (car conversion kits, small wind turbines, and trains and trams), but doesn’t talk about the commercialization timeline.

This is still what I’d call R&D work, from what I can tell. I can’t believe that replacing the power train for a taxi is going to be cost-effective in an industry where the turnover should be “every couple years” for all their cars, but who knows, Mexico City is trying to move to more electric taxis (including some from Carlos Slim’s company, and some from China)… it would be nice if it works, though even if it is as revolutionary as Koyfman claims I imagine that the commercialization of the technology will probably take a lot longer than they hope it will.

That’s not a surprise, of course — the way to sell a penny stock is to conjure up dreams of it beating the big guys with some super-secret technique or technology that’s going to suddenly take over the market. It rarely happens that way, particularly in hard-to-scale businesses where you have to build stuff, but the hope is always there (remember little Eguana? That company was supposed to beat Tesla at the “power management” game, per Koyfman’s teasers back in 2016, and they’ve been making slow progress and have even generated a little revenue now, but still haven’t gotten anywhere near the point where the fundamentals make sense).

And always, of course, we have the lingering thought… if this company was really going to change the world, wouldn’t some much larger company that knows this company better than I do just swoop in and buy them for their supposedly better technology? After all, this is a $15 million company (and Eguana is about $40 million), which is less than what a big player like Emerson Electric (EMR) makes in profit (not sales, but actual profit) every week.

The good news is that they want to sell their power management technology, building it into circuit boards for other company’s motors, not build anything themselves… which means that the potential is very high and operating costs will be low. But the risk of failure or long delay is also very high, all they have so far is test projects with a few partners, and we don’t really know if they’ll be able to commercialize the technology at all. That is, of course, why the company is valued at only $10-20 million, and why the stock trades for pennies.

So… that’s about all I can tell you. If you want to invest in teensy companies like this, I’d urge you to make your investments small and be extremely involved in learning about the company’s prospects and plans — the finances won’t be appealing for a long time, if ever, so you would have to invest based on your understanding of the technology and the company’s ability to commercialize that technology, and build that understanding reading something beyond just what they put in their promotional materials. I don’t understand the technology very well, and I’m skeptical of the commercialization timeline and potential, so I’ll stay on the sidelines… but your mileage (or voltage) may very well vary, so feel free to share your thoughts with a comment below.

P.S. Here’s your 14-month update as of December 5, 2019… The story is essentially the same today as it was when Koyfman started teasing the stock in October of 2018, though it’s no longer at 40 cents (Canadian). Still no revenue, no volume production of their own or licensed designs, iterative progress with their partner in testing their prototype(s), and a couple new very-early-stage partners in Templar (electric boats startup) and Motorino Electric (electric bikes)… and rising SG&A and, to a lesser extent, R&D costs, paid for by selling small tranches of shares and warrants.

The most “real” item to date, beyond their latest private placements to raise another ~$1.7 million over the past couple months, is their purchase order from Potencia, for $500,000 worth of motor drivers that they hope to begin fulfilling early next year — that won’t be enough to get them to a sustainable level of revenue, and it will sounds like it will be a meaningful challenge for them to even fill that order (they’re doing it in stages), but it will at least give them a little practice producing and delivering a product… and they may be able to build on it if it’s a bit success for Potencia. My opinion on the stock hasn’t changed.

The stock has been teased off and on by Koyfman over the past year+, which probably accounts for a meaningful portion of the trading in Exro shares. Here’s what the stock has done over that time, in case you want a visual representation…

XRO Chart

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toff
toff
December 14, 2018 5:19 pm

I saw that the company has 10 patents on the technology dating back to 2006 (https://patents.justia.com/assignee/exro-technologies-inc). So that says to me it’s not just a “story” … it’s a real technology which the inventor/founder is doing his best to get adopted. FWIW.

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bmccombs1
December 17, 2020 5:33 pm

Travis, after all the facts and the approach of this company over last 2 years … What are your present opinion………….

contractorr
contractorr
December 14, 2018 6:49 pm

I always wonder how many stupid investors throw their money on useless publications. On top, long teasers and lot of BS are enough. Why would someone waste precious 15 minutes watching a video or reading garbage? If details are not on first page why even bother. But I guess there are some folks go for the useless tease. That is the reason your service is appreciated. Thanks

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E Z
Guest
E Z
May 24, 2020 1:03 am
Reply to  contractorr

!!!

cyberguy
Irregular
December 16, 2018 2:28 pm

If we are advancing the notion that Tesla is going to be absolete in a few years, then maybe we should be tracking alternative engines and energies, like FCEL — liquid hydrogen fuel cells, or the new technology from an Israeli firm, Phinergy: The Israeli car that runs on air with metal-air battery…..

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Anne Nonimus
Guest
Anne Nonimus
December 29, 2018 12:31 am

I can’t see how this (stepping coils in and out of circuit) could be more efficient than the AC PWM motors currently in use. EV motors-generators have incredibly high efficiency already. They also have an amazingly high peak torque range that already runs through the motor’s entire range.

fulllayout
Member
fulllayout
January 6, 2019 4:55 pm

This is also a digression in every way – except that it is about energy technology. There is apparently a proven method for splitting water into hydrogen and oxygen by basically pouring it through a membrane/catalyst. It was invented by Dr. Daniel Nocera – according to a speech I heard from Dr. Nocera perhaps 10 years ago. His idea was that every house could be off the electric grid and produce its own energy using this technology, which was diverted from his lab at MIT to a company called Sun Catalytic. I periodically check on this thinking – why haven’t I heard anything about this? Apparently Lockheed Martin has bought out the technology and is somewhat mothballing it, which is weird because Lockheed also is building a Mars station which is supposed to be powered by splitting water into hydrogen and oxygen – but using a much less efficient process.

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E Z
Guest
E Z
May 24, 2020 1:07 am
Reply to  fulllayout

or Moray b. King, Water, the key to new energy
digital on Amazon

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timcoahran
Irregular
May 31, 2020 2:32 am
Reply to  fulllayout

For splitting water into hydrogen and oxygen , you HAVE TO provide outside energy from somewhere – it’s not free.

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hambywesley55
hambywesley55
January 26, 2019 11:16 pm

Hey, I am an electrical Engineer. This technology is very hard fact. I have heard this concept several years ago, but no one seemed interested. This was because this country was making money hand over fist on everything else. It seems to have started a new interest because of the clean energy craze. I am going to dump a grand or two in this because I know it WILL come to pass. A completely simple concept, haven been completely ignored until now.

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wryter
February 10, 2019 7:14 pm

This kind of technology intrigues me so I stick such stocks in a Watch List and do exactly that. When Insiders start buying large chunks I jump in with a small investment. Sometimes it pays off nicely and sometimes it doesn’t. In any event small gambles make life interesting.

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René
Member
René
July 10, 2020 3:35 am
Reply to  wryter

Have a look at Exro Technoligies in Vancouver.
This stock is really doing very well lately.
Succes!

Brian Johnston
Guest
Brian Johnston
March 12, 2019 2:25 am

Are you suggesting a motor in reverse generates electricity.
That’s nuts.
A generator is not a motor in reverse.
Wind turbines do not produce useable energy. They can’t boil a jug.

dsouza.allwyn
August 21, 2020 11:44 pm
Reply to  Brian Johnston

Motor Drives a load using electricity . Generator is driven by external means( wind, tides, steam, water , etc) to produce electricity .

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Allan Jiracek
Member
March 28, 2019 9:43 pm

Do they really sell a lot of programs on these things they hype up and really don’t amount to anything? I suppose I can buy $50.00 worth and forget about it,

Mark
Guest
Mark
October 14, 2020 12:50 am

$3.15 A SHARE. MARKET CAP now $300 mm+ HIRING SOME WELL CONNECTED PEOPLE.Ex Ford etc. OCTOBER 2020.

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Mark
Guest
Mark
October 14, 2020 1:00 am

Congrats your $50 is now $552.

talanminor
talanminor
December 3, 2020 4:46 pm

The stock is going to end up being one hell of a winner. I bout it at $.48 a share and it’s now at $3.30. Eight partners on board and very positive real world performance…Where do you think this stock can go to as it becomes revenue positive over the next year?

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talanminor
talanminor
December 3, 2020 5:22 pm
Reply to  talanminor

Forgive the typo, I was using talk to type and I should have reviewed it before I posted. I bought it at forty-eight cents a share and I see it having a huge upside.

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wck
Guest
wck
February 28, 2021 10:29 am

I liked what I read and heard in 2019 about EXRo’s product potential for improving electric motor efficiency . Accordingly, I loaded up at o.16 per share in mid 2019. When the stock hit $ 5.95 in 2020, it had much more than covered the celebration champagne. Starting with a lady president who formerly headed the electric motor division of General Electric, an excellent small engineering and management staff is being built to handle the prototypes now being fabricated and shipped under
contract for field testing. Firms requiring everything from small bicycle and larger motorcycle motors to motors for delivery vans to heavy duty trucks are now being served . Favorable test results are already being reported by the first of these interested firms to receive test assemblies. The future looks very promising to say the least,

the

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Daryl
Guest
Daryl
March 10, 2021 11:32 pm

Raymond James analyst confirms price target at $9 Mar 2021

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